Financial Market wrap up of week of 18th June.   

22 June 2018 ( Lagos ) 

Short week dominated by negative trading.

Sentiment at week close persisted bearish, with the NSE ASI ended the day (-76bps) and week (-274bps) in negative terrirtory, after losing every session in the shortened week. Drilling down to sector performance, the Industrial Goods sector (-194bps d/d; -302bps w/w) closed under after losses in WAPCO (-250bps) and heavyweight, DANGCEM (-230bps) outweighed a 313bps uptick in CCNN. The Consumer Goods sector (-79bps d/d; -50bps w/w) also lost on the day and week after UNILEVER (-425bps) and NB (-134bps) shed points on the day. Likewise, the Oil & Gas sector (-61bps d/d; -594bps w/w) closed the day in the red, and was the week’s biggest loser, with as in ETERNA (-493bps) and FO (-489bps) dragged the sector. Meanwhile, the Banking sector (-196bps w/w) rose 65bps today on the back of gains in GUARANTY (+162bps) and ZENITHBANK (+78bps). 

Sentiment this week was largely bearish, characterized by huge losses in select large caps. Though there is still some room for further losses, analysts foresee bargain hunting at week open as investors take position on depressed stocks. 

Stock Watch

SEPLAT shed 9% this week, pressuring the Oil & Gas sector to a 594bps w/w decline. The stock currently trades at a price of N685.00, below our target price of N970.18 and has returned 9% YTD. 

No auction despite buoyant liquidity 

Despite the absence of a liquidity mop-up today, sentiment in the T-bills space turned negative, with yields advancing 7bps on average. Specifically, while yields on the 27DTM and 195DTM bills declined 21bps and 62bps to settle at 12.51% and 12.74% respectively, yields on the 41DTM and 223DTM bills advanced 23bps and 65bps to settle at 13.07% and 13.20% respectively. Meanwhile, trading in the bond space was mixed, with demand heavy on the shorter-dated bonds. Overall, yields on benchmark bonds advanced 3bps on average. Notably, while yield on the 16.00% FGN JUN 2019 bond declined 29bps to settle at 12.50%, yield on the 16.39% FGN JAN 2022 bond advanced 53bps to settle at 13.68%. Overall, the fixed income market was largely bearish this week, with yields on T-bills and benchmark bonds rising 20bps and 24bps w/w on average, respectively. 

Barring an OMO auction by the CBN to mop-up liquidity at week open, analysts expect buoyant system liquidity (N842 billion) to support buying at the start of next week. 

The CBN continued its regular spate of FX interventions in the FX market, notably infusing $210 million through multiple windows at week open. Amidst this, the Naira appreciated ?0.07 w/w at the I&E FX Window to close at ?361.00 against the dollar but remained flat w/w in the parallel market at ?361.00. 

Analysts expect the Naira to remain stable across the various windows of the currency space as the CBN continues to intervene in the FX market. 

Corporate Disclosures 

Berger Paints Nigeria Plc. announced that a meeting of its Board of Directors will be held on July 19, 2018. At this meeting, the Board will consider and if think fit, approve the financial results for the six months ended June 30, 2018. 

Cement Company of Northern Nigeria Plc. announced that it’s 39th Annual General Meeting will be held of Thursday, July 26, 2018. 

Source: Vetiva Capital Management Limited.

Reporting for EasyKobo on 22 June 2018, Friday in Lagos , Nigeria

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